Leases

6 Months Ended

Jun. 30, 2021

Effective January 1, 2021, the Company adopted ASC 842 Leases using the modified retrospective approach. The Company elected the use of the package of practical expedients permitted under the transition guidance which allows the Company not to reassess whether a contract contains a lease, carry forward the historical lease classification and not reassess initial direct lease costs. The Company also elected to apply the short-term measurement and recognition exemption in which the right-of-use (“ROU”) assets and lease liabilities are not recognized for short-term leases. Adoption of this standard resulted in recording of net operating lease ROU assets and corresponding operating lease liabilities of $13.2 million and $13.5 million, respectively. The standard did not materially affect the condensed consolidated statements of income and had no impact on the condensed consolidated statements of cash flows.

The following table summarizes the balances as it relates to leases at the end of the period (in thousands):


	(*)	June 30, 2021
ROU Asset	Other assets	$	10,537

Lease liability, current portion	Other current liabilities	$	6,379
Lease liability, long-term portion	Other long-term liabilities	4,227
Total lease liability		$	10,606

(*) Location on the condensed consolidated balance sheet

The Company determines if an arrangement is a lease at its inception. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets also include any initial direct costs and prepayments less lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. As the Company’s leases generally do not provide an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Operating lease arrangements are comprised primarily of real estate and equipment agreements for which the right-of-use assets are included in other assets and the corresponding lease liabilities, depending on their maturity, are included in accrued liabilities or other long-term liabilities in the condensed consolidated balance sheets.

The details of the Company’s operating leases are as follows (in thousands):


	Three Months Ended
	June 30, 2021
Operating lease expense	$	1,651
Variable lease expense	91
Short-term lease expense	—
Total lease expense	$	1,742

The following table presents the maturities of lease liabilities as of June 30, 2021 (in thousands):


Fiscal year ending June 30,	Operating Leases
2021	$	3,333
2022	6,071
2023	896
2024	794
2025	19
Thereafter	—
Total lease payments	11,113
Less: Imputed lease interest	(507)
Total lease liabilities	$	10,606

The following table represents future minimum lease obligations under non-cancelable operating leases as of December 31, 2020 (in thousands):


Fiscal year ending December 31,	Operating Leases
2021	$	6,663
2022	6,073
2023	893
2024	791
2025	15
Thereafter	—
Total	$	14,435

The Company’s weighted-average remaining lease-term and weighted-average discount rate are as follows (in thousands):


	Three Months Ended
	June 30, 2021
Weighted average remaining lease-term	2.0 years
Weighted average discount rate	5	%

Supplemental cash flow and other information related to operating leases are as follows:


	Three Months Ended
	June 30, 2021
Operating cash flows from operating leases	$	1,465
Non cash investing activities:
Lease liabilities arising from obtaining right-of-use assets as of January 1, 2021	$	13,464